Simmons First National (US:SFNC)2025-02-27 21:09Financial Performance - Net income available to common shareholders for the year ended December 31, 2024, was $152.7 million, or $1.21 diluted earnings per share, compared to $175.1 million, or $1.38 diluted earnings per share for 2023[217]. - Adjusted earnings for the year ended December 31, 2024, were $177.9 million, or $1.41 adjusted diluted earnings per share, compared to $207.7 million, or $1.64 adjusted diluted earnings per share in 2023[217]. - Included in 2024 results were $25.2 million of certain items, net of tax, primarily related to the loss on sale of securities, a FDIC special assessment, and branch right-sizing initiatives[217]. - Included in 2023 results were $32.7 million of certain items, net of tax, primarily related to early retirement program costs, loss on sale of securities, a FDIC special assessment, and branch right-sizing initiatives[217]. Assets and Liabilities - As of December 31, 2024, Simmons First National Corporation had total consolidated assets of $26.88 billion, total consolidated loans of $17.01 billion, total consolidated deposits of $21.89 billion, and equity capital of $3.53 billion[18]. - As of December 31, 2024, the company owned $6.17 billion in investment securities, including $3.64 billion in held-to-maturity securities and $2.53 billion in available-for-sale securities[116]. - As of December 31, 2024, the company's total investment in the Federal Home Loan Bank of Dallas was $56.2 million[101]. Acquisitions and Growth Strategy - The company has completed 21 whole bank acquisitions since 1990, including the acquisition of Reliance Bancshares, Inc. in April 2019, which added approximately $1.5 billion in assets and 22 branches[27]. - In October 2019, the acquisition of The Landrum Company added approximately $3.4 billion in assets and strengthened the company's position in Missouri, Oklahoma, and Texas[28]. - The acquisition of Landmark Community Bank and Triumph Bancshares in October 2021 provided a combined total of $1.82 billion in assets, enhancing the company's footprint in Tennessee[29]. - The acquisition of Spirit of Texas Bancshares in April 2022 added approximately $3.1 billion in assets, further strengthening the company's position in Texas[30]. - The company focuses on organic growth opportunities in addition to considering strategic merger and acquisition opportunities[31]. Regulatory Compliance and Capital Management - The Company is required to maintain "well-capitalized" and "well-managed" status for its bank subsidiaries as defined by the FRB[48]. - The Basel III Capital Rules require a minimum common equity Tier 1 (CET1) capital ratio of 4.5% and a capital conservation buffer of 2.5%[66]. - Under the fully-phased in Basel III Capital Rules, the minimum ratios including the capital conservation buffer are CET1 to risk-weighted assets of at least 7.0%, Tier 1 capital to risk-weighted assets of at least 8.5%, and total capital to risk-weighted assets of at least 10.5%[70]. - As of December 31, 2024, Simmons Bank was classified as "well capitalized" based on the capital ratios established by the Basel III Capital Rules[73]. - The company is required to maintain a total risk-based capital ratio of at least 10% to be considered well capitalized[12]. Risk Management - The effectiveness of the company's risk management framework is uncertain, and any flaws could lead to unexpected losses and regulatory scrutiny[151]. - The company maintains a risk management framework that includes oversight of third-party service providers to mitigate cybersecurity risks[186]. - The company is subject to fraud risks, including deposit and loan fraud, which could materially impact its business and results of operations[149]. - The company faces significant competition for acquisition candidates, which may hinder its ability to identify and acquire suitable targets on acceptable terms[144]. Employee and Operational Insights - As of December 31, 2024, the company had approximately 2,946 full-time equivalent associates, with no labor disputes reported[43]. - The company has implemented extensive training and development programs for associates to enhance skills and promote from within[41]. - The Company conducts financial operations from approximately 222 financial centers located in Arkansas, Kansas, Missouri, Oklahoma, Tennessee, and Texas[192]. Market and Economic Conditions - The company is vulnerable to economic conditions in the states it operates, which could affect loan repayment and collateral values[137]. - Continued inflationary pressures could increase operating costs for both the company and its borrowers, potentially leading to higher default rates[136]. - A significant portion of the loan portfolio includes commercial real estate and industrial loans, which present heightened lending risks due to their reliance on economic conditions[128]. Cybersecurity and Information Security - Cybersecurity threats are increasing, and the company has implemented a comprehensive information security program to manage these risks[188]. - The Company has established an information technology committee that receives regular reports concerning the information security program and cybersecurity matters[190]. - The Company’s board of directors has approved various information security-related policies, including the Acceptable Use Policy and Information Security Policy[189]. Shareholder and Stock Information - The Company has a stock repurchase program under which it may repurchase up to $175.0 million of its Class A Common Stock[199]. - The 2024 stock repurchase program has replaced the 2022 program, which was set to terminate on January 31, 2024[199]. - The performance graph indicates that the cumulative total shareholder return on the Company's Common Stock was 99.47 as of December 31, 2024, compared to 100.00 on December 31, 2019[204].